Question

The Haskins Company manufacturs and sells radios. The Haskins Company expects to sell 25,100 units of its product at $11.10 per unit and to incur variable costs per unit of $6.10. Total fixed costs are $71,000. The total contribution margin for Haskins Company is:

Answer 1

Total Contribution margin for Haskins Company is $125,500.

The total contribution margin generated by an entity represents the total earnings available to pay for fixed expenses and to generate a profit.

The Total contribution margin = Total sales - Total variable cost (or) Fixed Cost + Profit.

Units	Per unit	25100 unit
Selling Price	$      11.10	$                           2,78,610
Variable cost	$        6.10	$                           1,53,110
Contribution	$        5.00	$                           1,25,500
Fixed cost		$                              71,000
Profit		$                              54,500

Contribution Margin Per unit =	Selling price - Variable cost
	= $11.10 - $6.10
	$5

Total Contribution Margin =	Total Sales - Total Variable cost
	= $278,610 - $153,110
	$125,500

Total Contribution Margin =	Total Fixed cost + Profit
	= $71,000 + $54,500
	$125,500

Contribution Margin Ratio =	Contribution/Selling price
	= $ 5 /$ 11.10
		45.05%

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